Wednesday, 27 April 2011

Coal mines told to pay for emissions

20 April 2011, Page: 2

Change Minister Greg Combet has slapped down Australia's coal miners, telling them they will not win an exemption from paying a carbon tax. In a meeting with the six biggest coal miners Bill1, Rio Tinto, Xstrata, Peabody, Centennial Coal and Anglo American Mr Combet yesterday said the government would include coal mines under a carbon tax to drive changes in the industry.

Coal miners want their emissions exempted from any carbon price. Coal mines produce "fugitive" emissions mainly methane, a potent greenhouse gas during mining. During the meeting, the companies are understood lo have told Mr Combet that if those fugitive emissions are not excluded from a carbon tax, they are likely to invest more in countries where carbon is not taxed.

Under the now dumped emissions trading scheme, coal miners were to get SI.5 billion in compensation over five years. Climate Change Minister Greg Combet said last night that the government was willing to discuss "assistance for the most affected coal mines to support jobs and competitiveness", but that previous economic modelling had found that most mines would only face marginal costs due to methane emissions.

The Grattan Institute has found 95% of thermal coal mines (coal for producing power) and 70% of metallurgical coal (for producing iron and steel) mines will face only small impacts from a carbon price of even $35. Those left facing bigger impacts will be covered by soaring global coal prices, the institute concluded, increasing coal margins to at least $44.50 a tonne for thermal coal and $96.50 per tonne for metallurgical coal over the coming years.

The meeting with coal miners followed a separate meeting between Mr Combet and Resources Minister Martin Ferguson and a broader mix of trade exposed industries. The Age understands during that meeting, Shell, One Steel and Visy made vocal representations about the effect of a carbon tax on their industries. The Business Council of Australia and the Australian Industry Group also put forward their members' views.

Yesterday the government set up another industry consultation group to discuss how a carbon price would affect farmers, other food producers and the forestry industry. Greens senator Christine Milne said some sectors such as steel had a case for compensation because they were trade exposed, but all companies should not simply be compensated for lost profits.